Rules or Principles of Business Ethics
Rules or principles of business ethics are the code of conduct for businessmen. It tells us how businessmen should do business for social good. These principles are related to consumers, employees, investors, local community and the society as a whole.
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The important rules or principles of business ethics are as follows:-
- Avoid exploitation of consumers : Don't cheat and exploit consumers by using bad business practices such as artificial price rise and adulteration.
- Avoid profiteering : Don't indulge in unscrupulous activities like hoarding, black-marketing, sale and use of banned or harmful goods, etc., for the sake of greed to earn exorbitant profits.
- Encourage healthy competition : Don't destroy a healthy competitive atmosphere in the market which offers certain benefits to the consumers. Do not engage in a cut-throat competition. Avoid making attempts to malign and spoil the image of competitors by unfair means.
- Ensure accuracy : Always check and verify the accuracy in weighing, packaging and quality while supplying goods to the consumers.
- Pay taxes regularly : Pay taxes and other charges or duties to the government honestly and regularly. Avoid bribing government officials and lobbying for special favours.
- Get accounts audited : Maintain accurate business records, accounts and make them available to all authorised persons and authorities.
- Fair treatment to employees : Pay fair wages or salaries, provide facilities and incentives and give humane treatment to employees.
- Keep investors informed : Supply reliable information to shareholders and investors about the financial position and important decisions of the company.
- Avoid injustice and discrimination : Avoid injustice and partiality to employees in transfers and promotions. Avoid discrimination among them based on gender, race, religion, language, nationality, etc.
- No bribe and corruption : Don't give expensive gifts, secret commissions, kickbacks, payoffs to politicians, bureaucrats, government officials and suppliers. Say no to bribe and avoid corruption.
- Discourage secret agreement : Do not make a secret agreement with other businessmen for controlling production, distribution, pricing or for any other activity, which is harmful to the consumers.
- Keep service before profit : Accept the principle of "service first and profit next." The customer or consumer is the most important part of any business. All business activities are done for meeting his needs and for increasing his satisfaction and welfare.
- Practice fair business : Make your business fair, humane, efficient and dynamic. Give the benefits of these qualities to the consumers.
- Avoid monopoly : Avoid forming private monopolies and concentration of economic power. Monopolies are bad for consumers.
- Fulfil customers expectations : Adjust your business activities as per the demands, needs and expectations of the customers.
- Respect consumers rights : Give full respect and honour to the basic rights of the consumers.
- Accept social responsibilities : Honour responsibilities towards different social groups.
- Satisfy consumers wants : Find out and satisfy the wants of the consumers. Use the available resources to produce good quality goods and services. Supply these goods and services regularly to the consumers. Charge reasonable prices for the goods and services. Give proper after-sales services. Do not produce goods and services, which are harmful to the health and life of the consumers. Remember, the main objective of the business is to satisfy the consumers wants.
- Service motive : Give more importance to service and consumer's satisfaction and less importance to profit-maximization. Make profits by providing services to the consumers. Do not make profits by exploiting the consumers.
- Protect group interests : Protect the interest of the group i.e give employees better wages and good working conditions, give shareholders better rate of dividend, give consumers good quality goods and services at low prices, etc.
- Optimum utilisation of resources : Ensure better and optimum utilisation of natural and human resources and minimise wastage of these resources. Use the resources to remove poverty and to increase the standard of living of people.
- Intentions of business : Use pure, legal and sacred means to do business. Do not use illegal, unscrupulous and evil means to do business.
- Follow Woodrow Wilson's rules : According to the late American President Sir Thomas Woodrow Wilson, there are four important principles of business ethics. These four rules are as follows:-
- Rule of publicity : According to this principle, the business must tell the people what it is going to do. It must not create doubts, misunderstanding, suspicion, secrets, etc.
- Rule of equivalent price : According to this principle, the customer must be given proper value for their money. So the business must not sell below standard, outdated and inferior (poor) goods for high prices.
- Rule of conscience in business : If the business is conducted properly, then it is beneficial to the society. Otherwise, it is harmful to the society. Therefore, the businessman must have a conscience, i.e. a morale sense of judging what is right and what is wrong. He must be very careful while taking business decisions because these decisions affect the entire society.
- Rule of spirit of service : The business must give importance to the service motive. That is, priority must be given to render service to human beings over profit.